Auditor Type Research Articles

COVID-19에 따른 감사인의 대응

[Purpose] The purpose of this study is to investigate auditors response to Coronavirus Disease(COVID-19). The outbreak of COVID-19 paralyses health, social, and economic parts and eventually it had considerable economic and financial impacts worldwide. To prevent the spread of the COVID-19, the government have urged people to stay at home. The COVID-19 led to negative impact on firms’ liquidity, profits and going-concern assumptions. Therefore, auditors might encounter some challenges during COVID-19 such as new audit procedures, a lack of verifying financial information and exceptional situation of manipulating accounting numbers. We investigate whether auditors input more audit hours during COVID-19.
 [Methodology] This study uses 3,800 listed firm-years samples during prior year(2019) and the initial year of the COVID-19 outbreak(2020). We use audit hours of managers, registered certified public accountants, staff auditors, and all auditors for auditors response. To control industry effects during COVID-19, we apply fixed effects on our regression model.
 [Findings] We find auditors input more working hours on year-end audits during COVID-19. It indicates that all types of auditors might put more efforts to mitigate audit risk. Also, we find that year-end audit hour ratio is increased during COVID- 19.
 [Implications] As COVID-19 increases audit risk and also have auditors adopt a new audit procedures, COVID-19 could be a challenge to auditors. This study empirically shows how auditors respond to COVID-19. The auditors spend more audit hours during COVID-19 to mitigate audit risk and apply new procedures.

Disclosure of Key Audit Matters: European Listed Companies’ Evidence on Related Parties Transactions

The growing expenses, dependence on IT for business operations, and growing requirements regarding related party transaction (RPT) reporting impose the need for increased attention to this area. The paper’s objective is to examine the nature of RPTs, identified by auditors as a key audit matter (KAMs), challenges and solutions to problems related to risk management, and the detection of factors affecting audit quality. The research methodology is qualitative, with an analysis of the level of disclosure of KAMs reported by auditors from the Related Parties category, grouped by type of auditors, their opinion, year, country, and fields of activity. Data were collected from the Audit Analytics database and filtered by category KAM: Related parties, period 2013–2021. The selection resulted in 111 companies reporting 248 KAMs related to RPTs, from which most were reported in 2017–2019. Of these, nearly two-thirds were reported by auditors from the Big4 category. Most KAMs were reported by companies in the U.K., Germany, and France, and the industries with the most KAMs were finance, insurance, and real estate. In conclusion, there are factors that can affect audit quality due to the reporting of RPTs, but by identifying them, the audit process can be better managed, thus increasing its efficiency.

PENGARUH FINANCIAL DISTRESS, ASIMETRI INFORMASI, TIPE AUDITOR, DAN MEKANISME GOOD CORPORATE GOVERNANCE TERHADAP PRUDENCE AKUNTANSI

This study aims to examine and analyze the effect of financial distress, information asymmetry, auditor type and good corporate governance mechanism on accounting prudence. Data collection in this study was carried out by indirect observation by researchers on the research object, namely manufacturing companies listed on the Indonesia Stock Exchange, to be precise at the Capital Market Reference Center. Observations made by researchers are non-participant observations, where the authors make observations as data collectors without involving themselves or being part of the social environment being observed, in this case the manufacturing companies and the listed components. The results of this study indicate that financial distress has a positive effect because when a company's finances are in trouble, managers tend to apply prudent accounting principles to reduce conflicts between investors and creditors, meaning that managers will increase their understanding of accounting prudence in response to high levels of financial distress. Information asymmetry has no effect, meaning that whether there is information asymmetry between investors and company management will not affect management's ability to prepare prudential financial reports. The type of auditor has a positive effect because the big four will be better able to detect possible errors in financial statements so that companies will apply accounting prudence more. The board of commissioners has no effect, because the management oversight function is not carried out properly because not all commissioners are able to carry out their duties properly. The independence of the board of commissioners has no effect, because an independent board of commissioners does not necessarily reduce conflicts of interest in a company because not all commissioners are free from business relationships.

EXPLANATORY FACTORS OF THE COMPLIANCE WITH IFRS 16 (LEASES) DISCLOSURE REQUIREMENTS: EVIDENCE FROM THE PORTUGUESE STOCK MARKET

This paper aims to analyze the degree of compliance with the IFRS 16 disclosure requirements, in the first year of mandatory adoption of IFRS 16, and to identify its determinant factors. As methodology, we performed a content analysis of the reports and accounts of a sample of companies listed on Euronext Lisbon. A multiple linear regression model was also developed, which assumes the compliance disclosure index as a dependent variable as some companies’ characteristics as potential explanatory factors. Results of descriptive statistics indicate that, in the first year of adoption of IFRS 16, the average level of compliance with disclosure requirements is approximately 0.66. The multivariate analyses reveals that the type of auditor significantly positively influences the compliance disclosure index and therefore we conclude that entities with accounts audited by one of the Big Four exhibit a higher level of disclosure than those that are audited by other audit firms.

Company Characteristics and Earnings Quality of Listed Non-Financial Companies in Nigeria

The quality of reported earnings has been a concern among regulators, standard setters, practitioners and researchers. To this end, the researchers examined the relationship between company characteristics and the earnings quality of listed non-financial companies in Nigeria. The non-financial firms were classified into natural, industrial and service sectors. Company characteristics were proxied using six dimensions, company size, auditor type, company leverage, company age, board size and board meetings. Income smoothing was utilized in measuring earnings quality. An ex-post facto research design was employed in conducting this study. It utilized a total of 697 firm-year observations from 95 companies for the period from 2012 to 2019. The data collected were analysed using descriptive, correlation and regression analysis. Evidence from the study revealed that company leverage and company age were the most prominent company characteristics that significantly influence earnings quality for most of the sectors and the combination of all sectors. Company leverage had a negative influence while company age had a positive impact. It is concluded that highly geared and younger firms have a greater tendency to manipulate their income to impress stakeholders. Therefore, auditors and regulatory bodies such as Financial Reporting Council should pay close attention to young and highly geared firms to curb income manipulation practices and hence enhance earnings quality.

Shareholders’ Perception of Auditor Type and Timing of Auditor Engagement: Evidence from Auditor Ratification

AbstractMany companies present their selected auditor to shareholders for ratification. In this study, we use auditor ratification voting results to examine whether shareholders view the type of auditor and the timing of the engagement as indicative of audit quality. The auditor ratification literature has yet to explicitly examine these research questions. Our study is unique in that we focus on the auditor switch setting and test how shareholders view a newly hired auditor. We find that shareholders are less likely to approve a non‐Big N auditor than a Big N auditor. We also document that shareholders view late auditor engagements (i.e., during or after the fourth quarter) more negatively, consistent with the argument that late appointment of new auditors should be viewed with caution. The timing effect is particularly acute for non‐Big N firms; however, shareholders do not seem to mind late engagements of Big N auditors.

The relationship between corporate governance mechanisms and integrated reporting practices and their impact on sustainable development goals: evidence from South Africa

PurposeThe first purpose of this paper is to investigate whether corporate governance mechanisms, in particular the characteristics of the board, audit committee and risk management committee, are associated with the level of disclosure in integrated reports of South African listed firms. The second purpose of this paper is to analyze how integrated reporting (IR) affects the sustainable development goals (SDGs).Design/methodology/approachThis paper uses a mixed methods approach. First, a multiple regression analysis is used to estimate the impact of corporate governance mechanisms on IR practices of a sample of South African listed firms during the period between 2019 and 2021. Using the content analysis method to measure the level of IR, disclosures were measured using a disclosure index consisting of 60 information items developed from the IIRC framework and previous studies. Second, based on a database containing 33 articles in the Meditari Accountancy Research journal with a publication date from 2013 to 2021, a systematic review of the academic literature focusing on IR is conducted to analyze how IR influences SDGs.FindingsThe results indicate that board size, board independence and risk management committee independence have a positive effect on IR practices. However, board expertise, board activity, audit committee independence, audit committee size, audit committee expertise, audit committee meetings, risk management committee expertise, risk management committee meetings, risk management committee size and the auditor type are negatively related to IR practices. The results also indicate that IR has an important role in achieving SDGs by relying on integrated thinking that integrates sustainability into the enterprise’s strategy and helps the integration of capitals. In addition, sustainable business models create long-term values.Research limitations/implicationsThis study was limited to a sample size of 75 firms, which is country-specific; however, it sets the tone for future empirical research on the subject matter. This study provides an avenue for future research in the area of corporate governance and IR practices in other emerging countries, especially other African countries.Practical implicationsThis study provides useful insights for managers and policymakers to better understand which corporate governance mechanisms can best encourage a company to improve IR practices.Originality/valueTo the best of the author’s knowledge, this study is, perhaps, the first to examine the effect of risk management committee characteristics on IR practices. This study provides new insight into the contribution of accounting research toward the achievement of SDGs.

The Effect of Corporate Governance Mechanisms on the Quality of Financial Statements and Its Reflection on the Type of Auditor's Opinion

Corporate governance has become an important topic after the financial crises that occurred in many companies and led to their collapse in the nineties of the twentieth century, and technological developments affected accounting and the appropriateness of financial reports. Many corporations used corporate governance concepts to acquire the trust of investors who value transparency and information sharing. The goal of this research is to look at the impact of corporate governance structures on financial reports quality and how it relates to the type of external auditor. The findings of the study show that institutional shareholder ownership has a positive and significant link with financial report quality, and that the auditor's view diminishes the relationship between institutional shareholder ownership and financial report quality. The study concluded that managers' ownership has a positive and important relationship with the quality of financial reports, and the auditor's statement has no effect on the relationship between managers' ownership and the quality of financial reports. The structure of the board of directors has a positive and important relationship with the quality of financial reports, and the auditor's statement has no effect on the relationship between the structure of the board and the quality of financial reports. Finally, the size of the council has a positive and important relationship. The auditor's comments reduce the relationship between board size and the quality of financial reporting.

Covid-19 disclosure: do internal corporate governance and audit quality matter?

PurposeThis study aims to examine the impact of internal corporate governance and audit quality on the level of COVID-19 disclosure in Egypt.Design/methodology/approachThe authors use manual content analysis to measure levels of COVID-19 disclosure in the narrative sections of annual reports. The authors analyze all companies listed on the Egyptian Stock Exchange over 2020–2021. The authors use different regression models to test the research hypotheses.FindingsThe analysis adds to the literature in two crucial respects. First, it provides a measure for COVID-19 disclosure in Egypt. Second, it provides evidence that governance mechanisms (board diversity, audit committee [AC] independence), auditor type and audit opinion affect the level of COVID-19 disclosure. The higher level of COVID-19 disclosure is associated with firms with more female directors on the board, being audited by one of the big four audit firms and receiving standard clean audit opinion. While the inexistence of an AC and more executives on the AC negatively affect COVID-19 disclosure levels.Originality/valueTo the best of the authors’ knowledge, it is the only paper that examines COVID-19 disclosure in the Egyptian context. It is also the first paper that provides evidence on the impact of internal governance and audit quality on COVID-19 disclosure.

The informational value contained in the different types of auditor’s opinions: Evidence from Portugal

The informational value contained in the different types of auditor’s opinions: Evidence from Portugal

An Exploratory Study of the Familiarity and the Perceptions of Continuous Auditing Technology in Indonesia

While there is an increasing interest in continuous auditing technology research, most studies focus on developed countries. Based on the above background, the objective of this study is to explore the perception of the emergence of continuous auditing technology in a developing country - Indonesia. This study uses semi-structured interviews to collect its data. The findings show that the level of familiarity and the awareness of the existence of continuous auditing technology is varied. Several drivers are identified as the factors of their familiarity and awareness – length of employment, the type of auditors, and prior knowledge. This study also finds that while auditors' perceptions toward continuous auditing are favorable, the concern of insufficient competency to adopt and adapt to such technology was also raised.

The impact of corporate attributes on voluntary HR disclosure practices: a study of Indian corporate sector

PurposeThe objective of the present study is to examine the impact of corporate characteristics on human resource disclosures in Indian corporate sector.Design/methodology/approachThe study investigates the annual reports of 336 Indian listed companies of NSE-500 Index. The data are collected for the latest time period which contains eight years (FY 2012–13 to 2019–2020). The data of independent variables (company characteristics) have collected from annual reports and CMIE ProwessIQ Database of the Indian listed companies. The data of human resource dissclosure index (HRDI) is collected form annual reports using content analysis approach. For analysis purpose, descriptive statistics, Pearson's correlation matrix, Two-way Least Square Dummy Variable (LSDV) regression model have been used.FindingsThe outcomes show that net sales, market capitalisation, ROTA, return on equity, quick ratio, PAR have significant positive and age, profit after tax, current ratio have significant negative effect on HRDI. On the contrary, debt-equity ratio, earnings per share, type of auditor, listing status have insignificant positive and net fixed assets, promoter's holding have insignificant negative effect on HR disclosures of the selected Indian listed companies.Originality/valueThe HRDI constructed in the present study helps the Institute of Chartered Accountants of India (ICAI) and other regulatory bodies to make some standards regarding voluntary HR disclosure practices in Indian corporate sector.

Investigating the Relationship between Transactions with Affiliates and Fraudulent Reporting by Explaining the Moderating Role of Corporate Governance Companies Listed in Tehran Stock Exchange

Transactions with related parties have become a common way for fraudulent reporting due to the hiddenness and simplicity of manipulation, and the traditional methods of quantitative analysis have failed to discover the complex relationships of these transactions. Therefore, the detection of fraudulent reporting has attracted the attention of researchers and legislators. This research seeks to examine and test the relationship between transactions with related parties and fraudulent reporting by explaining the role of corporate governance moderation in companies listed on the Tehran Stock Exchange. The statistical population of this research includes 146 companies admitted to the Tehran Stock Exchange during a period of 9 years from 2012 to 2021. Multiple linear regression method has been used to test the research hypotheses. The results of the research showed that there is a positive and significant relationship between transactions with related parties and fraudulent reporting. In fact, the level of fraudulent reporting is higher in companies with related party transactions and fraudulent reporting. Also, the research results showed that there is a negative and significant relationship between corporate governance and fraudulent reporting. In other words, in companies where corporate governance is observed, the level of fraudulent reporting is lower. Examining the effect of corporate governance indicators on fraudulent reporting using unusual transactions with related parties shows that the independence of the board of directors and institutional shareholders has no significant effect on the relationship between transactions with related parties and fraudulent reporting, but the type of auditor has a direct and significant effect on the relationship between transactions with related parties and fraudulent reporting. Therefore, internal and external auditors, regulatory bodies, board of directors, and other professionals should identify this type of fraud and emphasize the importance of prevention approaches to reduce the possibility of committing corporate fraud. Regulators should also pay more attention to loan-based related party transactions and the total number of related party transactions.

AN EMPIRICAL STUDY ON THE INFLUENCES OF ACCOUNTING POLICIES, ORGANIZATIONAL CLIMATE, AND FINANCIAL REPORTING DISCLOSURES ON THE PERFORMANCE OF NON-FINANCIAL LISTED COMPANIES

This paper seeks to analyze the impact of disclosures on managers’ characteristics, business climate information, and key accounting policy variables on financial performance. Data were extracted from the annual reports of the non-financial listed companies on the Bucharest Stock Exchange. Fifty-seven companies from eight industries have been investigated over five years. The least-squares method for panel data (Panel Least Squares) was used in estimating eight models that proved to be valid for the Fisher test. The findings showed that a high level of disclosure of information about managers increases performance. In contrast, the increased disclosure of business climate information and the average degree of internal control is leading to lower company performance. From the analysis of key accounting policy variables, the estimated models showed that the overall level of provisions has a significant positive influence on the performance of the companies. In two models also the estimates of decommissioning costs of tangible assets have a significant positive impact on performance. A significant negative impact on performance is exerted by uncertainties in recognition, accounting valuation, or presentation of assets, judgments, and assumptions on contingencies, litigation risks, and R&D innovation costs. The existence of the audit report and the type of auditor do not significantly influence the performance of the examined companies. However, the existence of the corporate governance report is significantly and positively impacting financial performance.

Auditors' response to regulators during COVID-19: disclosures of key audit matters

PurposeNew Zealand regulatory bodies guided preparers and auditors of financial statements to deal with potential COVID-19 impacts on the financial statements and audit procedures. This study provides evidence of auditors' response to the impact of COVID-19 on the reporting of key audit matters (KAMs) in audit reports of listed companies in New Zealand. The purpose of this paper is to address this issue.Design/methodology/approachA sample of 50 New Zealand listed companies was selected to compare the KAMs in 2019 (pre-COVID-19) and 2020 (during COVID-19). The study uses content analysis to evaluate the KAMs’ disclosures and descriptive analysis to examine the differences between 2019 and 2020 in terms of the auditor type, industry sector and accounting standards.FindingsAuditors responded positively to the request from regulators to communicate the impacts of COVID-19. The findings show an increase in the amount and length of KAMs in 2020 compared to 2019, with 82% of companies and 61% of KAMs reporting the impact of COVID-19. The real estate and information technology sectors disclosed more on the impact than other sectors. In analysing the KAMs, accounting standards for inventories, property plant and equipment, impairment of assets, investment property, revenue from contracts with customers and leases were highly affected by COVID-19.Practical implicationsThe findings support regulators to evaluate how well auditors communicated matters relating to COVID-19 in the audit report. Also, the findings will help standard setters to identify key accounting standards affected by COVID-19 of KAMs and provide insights to users on how the KAM reporting enhances communicative value during the pandemic.Originality/valueThe current study captures the impact of COVID-19 on the reporting of KAMs by comparing changes before and during the pandemic.

Biological Asset Disclosure in Indonesia

The development of companies in the agricultural sector is supported by the availability of information, which is also a consideration for decision-making by company owners or company management. As a result, the company's annual report must include as much information as possible. Agricultural companies are required to disclose their biological assets under PSAK 69. However, many agricultural companies have not fully disclosed their biological assets. The focus of the research is to observe how biological assets, company growth, auditor type, and public ownership influence biological assets disclosure. Plantation & crops companies listed on the Indonesia Stock Exchange (IDX) are the population for this study, with a total of 25 entities. 13 out of 25 companies became the research sample taken using a purposive sampling method. The research technique uses panel data regression in Eviews 10. The findings of this study are biological assets intensity and auditor type have a significant positive impact on biological assets disclosure. Company growth has an insignificant positive effect on the disclosure of biological assets, public ownership has an insignificant negative effect on the disclosure of biological assets.

Relevance of Accounting Information: Audit Quality and Earnings Management as Moderating Variable

Purposes: This study investigates whether audit quality and earnings management moderate the effect of accounting information on market prices.Methods: This study consisted of a sample of 1525 go public firms on Indonesia Stock Exchange from 2016 – to 2020, except financial sector. Proxies of accounting information are earnings, book value, and operating cash flow. Audit quality is measured by auditor type and audit opinion. This study uses purposive sampling and testing moderated regression analysis.Results: The results indicate that accounting information - earnings; book value, and operating cash flow have a positive effect on stock market prices. Furthermore, the type of auditor and audit opinion strengthen the correlation between earnings and stock prices. However, it does not moderate the effect of book value and operating cash flow on stock prices. Furthermore, earnings management weakens the effect of earnings on stock prices. However, earnings management does not moderate the correlation of book value of equity and operating cash flows with stock prices.Novelty: This study enriched the literature on value relevance which is influenced by other factors such as audit quality and Earnings Management. It is hoped that further researchers can expand their research by examining other accounting information and other factors that can be used as a basis for investor considerations for investment decisions such as corporate governance or others

Factors influencing the disclosure of additional financial and non-financial information by large enterprises

Nowadays, more than ever, stakeholders are demanding that additional information are disclosed in addition to financial information as part of corporate reporting. This need is being recognized by regulators, who have begun to enact laws requiring large companies to disclose at least the required information and financial information. This study aims to examine some of the possible company characteristics that may influence the extent of information disclosure, particularly the direction of their influence and significance. The study was conducted on twenty (23.53%) listed companies operating in the real sector (non-financial sector) on the Zagreb Stock Exchange. Initially, the content analysis method was used to analyze the reports. In addition, multilinear regression was conducted to measure the influence of specific company characteristics. The research results revealed that the type of auditor, ownership structure, and size of the board of directors have a statistically significant positive influence on the quality of published financial and non-financial information. In contrast, the quotation days have a negative but not statistically significant influence at the 5% significance level. Finally, even though the overall results regarding the disclosure quality can be interpreted as satisfactory, there is room for further improvement regarding financial and non-financial reporting transparency.

On the surplus accuracy of data-driven energy quantification methods in the residential sector

Increasing trust in energy performance certificates (EPCs) and drawing meaningful conclusions requires a robust and accurate determination of building energy performance (BEP). However, existing and by law prescribed engineering methods, relying on physical principles, are under debate for being error-prone in practice and ultimately inaccurate. Research has heralded data-driven methods, mostly machine learning algorithms, to be promising alternatives: various studies compare engineering and data-driven methods with a clear advantage for data-driven methods in terms of prediction accuracy for BEP. While previous studies only investigated the prediction accuracy for BEP, it yet remains unclear which reasons and cause–effect relationships lead to the surplus prediction accuracy of data-driven methods. In this study, we develop and discuss a theory on how data collection, the type of auditor, the energy quantification method, and its accuracy relate to one another. First, we introduce cause–effect relationships for quantifying BEP method-agnostically and investigate the influence of several design parameters, such as the expertise of the auditor issuing the EPC, to develop our theory. Second, we evaluate and discuss our theory with literature. We find that data-driven methods positively influence cause–effect relationships, compensating for deficits due to auditors’ lack of expertise, leading to high prediction accuracy. We provide recommendations for future research and practice to enable the informed use of data-driven methods.

THE INFLUENCE OF CORPORATE GOVERNANCE ON INTEGRATED REPORTING DISCLOSURE MODERATED BY TYPE AUDITOR

The company's financial and non-financial statement information is likely to boost IRD's influence. Indonesia has not established guidelines for integrated reporting because it is still a novel concept for businesses and requires voluntary disclosure. The objective of this research is to the influence of independent board members, the board size, the female board, and the type of auditor on independent board members as a moderating variable on IRD. The sample in this study was the LQ45 Non-Banking on Indonesia Stock Exchange in the 2016-2020 period with a purposive sampling technique. The analytical tool used was Eviews 10 (x64). The result is independent board members have a positive effect and negative significance on IRD, board size has a positive effect on IRD, the female board has no effect on IRD, and the type of auditor no strengthens independent board members on IRD.